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Researching your Medigap Options

While researching Medicare Advantage plans, you may have come across advertisements for some plans that claim to have $0 premium and wondered how, or even if, this is possible – especially as many other insurance companies charge monthly premiums for these types of policies.

The good news is that these plans are not a scam – and in fact, many of them offer good quality coverage. By contracting with health care providers that enrollees must use, some insurance companies are able to save a great deal of money on Medicare Advantage plans – and are therefore able to pass the savings along to their policy holders.

Consider the Tradeoffs

Just as with anything else, when considering the purchase of a Medicare Advantage plan, it is important to go over all of the factors involved – and, if a policy comes with a $0 premium, it is likely that there will be tradeoffs in other areas.

For example, remember the old saying, “There really is no such thing as a free lunch.” With this in mind, be sure to read all of the fine print on the policy regarding the policy’s co-payments, deductibles, and any other potential out-of-pocket expenses that may be required of you. This is because in return for the $0 premium, it is likely that the costs will be passed off to you in some other way.

A $0 premium Medicare Advantage policy may also require that policy holders use in-network health care providers and facilities. In this manner, it could work like an HMO (Health Maintenance Organization) or a PPO (Preferred Provider Organization) where premiums are kept low (or in this case, at $0), but with heavy restrictions on the coverage.

It is also important to note, however, that a $0 premium policy could actually be an ideal choice for some individuals. For instance, those who are in good health and do not require a great deal of doctor visits won’t be required to pay a lot of expenses. So, in this case, the savings could be substantial.

In addition, many Medicare Advantage plans come with additional benefits over Original Medicare (Medicare Parts A and B), such as vision care, prescription drug coverage, and even fitness center memberships. Therefore, depending on exactly what benefits you use, the savings could add up to be even more.

You are either getting ready to turn 65 and you have been working after your

65th birthday and you might be looking to retire and activate your Medicare benefits. You’ve heard a little bit about your options with Medicare but you don’t know what direction is going to work for you. Let’s talk about Medicare Supplement plans or also referred to as Medigap policies.

Plans are standardized in different letter types from A to N depending what the policy will cover. Below is the Medigap Matrix, which you can also reference in your Medicare Guide to Choosing a Medigap Policy.

(Click the graph below to enlarge).

Notes:

* Plan F also offers a high-deductible plan in some states. If you choose this option, this means you must pay for Medicare-covered costs (co-insurance, copayments, deductibles) up to the deductible amount of $2,140 in 2014 before you policy pays anything.

** For Plans K and L, after you meet your out-of-pocket yearly limit and your yearly Part B deductible ($147 in 2014), the Medigap plan plays 100% of covered services for the rest of the calendar year.

*** Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in an inpatient admission.

You’ve probably seen this information but let’s talk in more understandable terms. Plan F is the most comprehensive plan you can get. It’s the most popular and probably what any agent is going to start by quoting you if you ask for a Medicare Supplement quote. I call this a “leave your check book at home policy”. It’s pretty easy to understand if you require medical services and its covered by Medicare then this policy picks up everything else. Any carrier that offers this policy HAS to follow these coverage rules. Example; ABC company has a Plan F in your area for $130 monthly premium and XYZ company has their plan F available for $150. It’s probably a wise decision to research ABC company though I say that with this caveat. Be aware of policy price increases with these insurance carriers. You could find yourself 8-10 years down the road with a higher monthly premium for your policy but just know this as well. All companies are going to raise their rates due to increase Medicare costs, inflation and the cost of doing business. Ok back to plan information and coverage. Sometimes it makes sense to go with a little bit less coverage and jump on a lower premium. The Plan G might make sense since it works close to Plan F except you pay for the Part B deductible. Here is an easy mathematical way to find out if that plan will be worth it. For the sake of this example lets use easy numbers. The lowest Plan F in your area is $100 so for full coverage you pay $1200 per year, and pay nothing out of pocket for doctors, hospitals, surgeries, and tests. You also find out the lowest Plan G in your area for $75. 75x12= $900 plus 2014 Part B deductible of $147 = $1047 with a grand total savings of $153 per year!

Now lets review some of the details and timelines of these policies. First off, when can you get into these policies? As a new beneficiary getting Medicare for the first time you can select any Medigap policy regardless of your Medical conditions. You have 6 months from the month you get your Medicare Part B to get into these policies this way or what most refer to as Guarantee Issue (GI). What you are not able to do is wait 3 years to save money on these premiums and maybe you are rather healthy and then something happens where you want the coverage and then decided to enroll into a Medigap policy. Carriers at this time have the right to either accept or decline you for your medical conditions. Let me try and make this a little easier to understand. You get a car but decide not to get car insurance since you are a good driver. 3 years later you get into an accident and than try and buy insurance to cover the costs. Same principle here, they aren’t going to issue you a policy. Ok hope that makes sense lets move onto other ways you can get into these policies.

You leave your group plan and pick up Medicare Part B for the first time you can get a GI issued policy.

You try out a Medicare Advantage Policy and within the first year you decide you want to pick up a Medicare Supplement Policy.

Your Medicare Advantage policy or Medicare decides to cancel their contract; you can get into a Medicare Supplement policy.

You have a Medicare Supplement policy, during Open Enrollment you decided to try for the first time a Medicare Advantage policy and within that year you decide you don’t like it you can go back to your Medicare Supplement policy that you dropped.

Your current Medicare Supplement policy goes bankrupt you can pick up another Medicare Supplement policy from another carrier.

I hope this information helps you understand how these policies work and you find it useful. I hate hearing horror stories or talking with people that didn’t understand their options be stuck with large Medicare bills.

Last thing I want to mention is that Medicare Supplement policies do not come with prescription drug coverage. This means if you do not have Rx coverage and do not want to get penalized for not having Part D coverage you are going to need to pick up a plan. Remember this, you do not need to get your prescription drug plan from the same company that offers you a supplement plan. In most cases they are going to send you separate bills so don’t think by getting your Medicare Supplement Policy and your Part D plan is going to save you a billing headache. Understand that Part D plans are completely different and you want to base your Part D plan on other criteria’s. I’ll go over those details in the next article.

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